Creating LoDs in Torque3D

First, grab the DTS Exporter for Max:

http://docs.torquepowered.com/artist/official/exporter_files/max_exporters/Max2DTS_All_Versions.zip

Now be sure to get the latest OpenCollada Exporter (I find it works much-much better than the built-in sollution)
http://opencollada.org/download.html

Install these for your version of max (9 in my case)

Assuming you've got your units setup correctly (I use meters with grid spacing set to 1 meter) creating lods is quite painless.

In this example I'm creating three distinct meshes for testing the LOD system.

My faraway lod is a cube named shape50

My mid-distance lod is a torus named shape200

and my upclose lod is a pointed cone named shape400

Create these shapes, at about 2~3 meters in hight, all centered on 0,0,0

The names are VERY important. The numbers represent the number of pixles an lod should be rendered at. The higher the number, the more pixles the shape will need to fill up on the screen to be displayed. So in this case, anything less than 50px will result in the cube shape appearing.

Select all three shapes and navigate to utilities and add the DTS Expoter Utility to your list if you haven't already done so.

Click Register Details, and then click Embed Shape.

Hard part's over, now lets export with OpenCollada .DAE and drop the resulting file into your game's art/shapes folder. (I created a lods folder for testing)

Open Torque, drop in your new model and zoom in and out a bit. You should see your different lods pop in and out as expected. All done!

If you wish, you can change the value of your LoDs within the Shape Editor.